Another Expansion in Climate Change Litigation Risk

For years, climate change has posed a litigation risk for companies. A mere glance at litigation dockets will show a variety of parties (some private and some governmental bodies) filing lawsuits, alleging, among other things, that companies have liability due to the impact of their operations on the climate and/or challenging their climate-related disclosures to the public. In addition to the litigation risk, public companies must confront shareholder proposals raising various issues related to climate change. Earlier in May, the Michigan Attorney General issued a climate-related notice that companies should monitor as they assess their climate-related risk.

Specifically, on May 9, Michigan Attorney General Dana Nessel published a notice, seeking the services of attorneys interested in initiating climate change lawsuits against fossil fuel companies. The request for proposals comes as Nessel warns the public of warmer temperatures impacting Michigan’s agribusiness sector and ski season in the state’s Upper Peninsula. Nessel anticipates deciding on who to hire for this litigation no later than August 2. Hired attorneys will be designated as Special Assistant Attorneys General and will be compensated under a contingency fee arrangement.

Because of the breadth of climate change litigation in the United States and abroad, lawsuits could manifest in a variety of ways. In some states, climate change lawsuits have been targeted at certain industries, such as the above-mentioned Michigan example. Conversely, some lawsuits have cast a broader net in the number of companies sued. 

And companies with international operations face a greater risk due to the proliferation of climate-related lawsuits in a number of countries. For example, multiple companies were sued in New Zealand due to their greenhouse gas emissions. In that case, the plaintiff has alleged the companies have caused a public nuisance, acted negligently, and committed the tort of climate system damage. The increasing frequency of climate change litigation targeting fossil fuel companies has some outlets drawing comparison to the past barrage of lawsuits against Big Tobacco, which ultimately resulted in a $200+ billion settlement between Big Tobacco and 46 states.

Irrespective of what claims are ultimately brought by the Michigan Attorney General, companies should assess their risks in this area. For instance, companies making climate-related disclosures (both mandatory and voluntary disclosures) should ensure those disclosures align with their operations and can be readily verified. Companies should conduct a similar review of any marketing or claims they make regarding climate change (including claims they make in response to shareholder proposals on climate-related issues). Companies that do not have a firm grasp of their greenhouse gas emissions or the overall potential impact of their operations on the environment should undergo those evaluations to capture their potential impact.

Climate change litigation can be costly and protracted. Of course, litigation is inherently unpredictable, and taking the measures noted above will not stop a lawsuit from being filed. That said, these steps can assist with easing the burdens associated with climate change litigation and position companies to hopefully expedite a resolution for these types of lawsuits.